TaxTMI 
TaxTMI 
1986 (1) TMI 41
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.... business which was transferred to M/s. Pioneer Motors (P.) Ltd. did not belong to the deceased in his individual capacity, but only to the Hindu undivided family of the deceased and his sons. The Assistant Controller held that since it was the deceased who had transferred the motor transport business, section 17(1) of the Estate Duty Act was attracted and the sum of Rs. 10,000 having been received within a period of three years preceding his death, that must be treated as benefit received by the deceased. Finding that the assets of the company as per its balance-sheet amounted to Rs. 78,336, the Assistant Controller deducted a sum of Rs. 7,835 being the value of the shares held by the deceased in accordance with rule 11(3)(b) of the Controlled Companies Rules and arrived at the figure of Rs. 70,501 as the value of the slice to be included in the estate of the deceased. The Appellate Controller upheld the view that section 17 of the Estate Duty Act was attracted to the facts of the case. But he took the view that since the company did not make any profits during the three year period before the death of the deceased and did not have any income, the sum of Rs. 70,501 had to be ex....
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....s death under section 17(1) of the Estate Duty Act? 3. Whether, on the facts and in the circumstances of the case, the value of the share of the lineal descendants of the deceased in the properties of the Hindu undivided family could not be included under section 34(1)(c) of the Estate Duty Act ? " The first question is referred at the instance of the accountable persons and the other two questions are referred at the instance of the Revenue. The Revenue has also sought a reference in respect of two more questions. The Tribunal having declined to make a reference, the Revenue had applied to this court under section 64(3) of the Estate Duty Act, 1953, and this court directed the Tribunal by an order dated December 13, 1983, to refer two more questions for the opinion of this court. Accordingly, the Tribunal has now referred the following two questions which we are numbered serial wise as Nos. 4 and 5 : " 4. Whether in view of article 3(c) of the articles of association of the company, M/s. Palkulam Estate Private Limited, the value of the shares held by the deceased therein arrived at by the application of rule 15 of the Estate Duty (Controlled Companies) Rules should be....
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....rt business, which was transferred to M/s. Pioneer Motors (P) Ltd. belonged to the Hindu undivided family, so long as the joint family continued, the manager, in this case the deceased, had wide powers to alienate the business and in so far as the provisions of section 17(1) of the Estate Duty Act were concerned, the interest of the deceased in the business which was transferred must necessarily attract the provisions of section 17(1) of the Estate Duty Act. Reliance was placed on the definition of " property ", in section 2(15) of the Act which undoubtedly includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method. Reference was then made to the provisions in section 39 of the Estate Duty Act which deals with valuation of interest in coparcenary property ceasing on death. Under section 39, it is provided that the value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint family property governed by the Mitakshara school of Hindu law which ceases on the de....
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....ly, the transport business, did not belong to the deceased alone. The business admittedly belonged to the Hindu undivided family consisting of the deceased and his sons. If any benefit in the nature of dividend is received by the deceased as a result of the transfer of the business, then the title to the dividend amount vests in the Hindu undivided family as such. On a plain construction of section 17(1) of the Act, it is difficult to hold that the transferor of the motor transport business was the deceased in his individual capacity. Undoubtedly, the deceased may have transferred the business as manager of the joint family, but that does not make him the transferor because the property did not exclusively belong to him. He acts as karta for and on behalf of the Hindu undivided family and in law, therefore, the transferor was the Hindu undivided family. If the capacity of the deceased was only that of a manager of the Hindu undivided family, notwithstanding the fact that he was a member of the Hindu undivided family, the position in law was not that he was the owner of any particular part of the property. In CED v. Alladi Kuppuswami [1977] 108 ITR 439, the Supreme Court, after refe....